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HMRC internal manual

National Insurance Manual

Class 1 NICs: Expenses and Allowances: Mileage allowances: Types of mileage allowances

Mileage allowances may be based on a:

  • fixed mileage rate paid for each mile travelled which includes all of the expenses associated with running a car
  • fixed mileage rate paid for each mile travelled to cover only the cost of fuel, plus a separate payment for associated running costs
  • round sum allowance which has no reference to the amount of miles travelled or any other considerations
  • monthly or annual lump sum based on an estimate of the costs likely to be incurred in using the car
  • combination of the above.

Most employers pay mileage allowances for business travel only but some may also pay allowances for private miles.